Does political instability lead to higher and more volatile inflation?: A panel data analysis
Economists generally accept the proposition that high and volatile inflation rates generate inefficiencies that reduce society’s welfare. Furthermore studies have shown that inflation is harmful to economic growth. However determining the causes of the worldwide diversity of inflationary experiences...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Economists' Association of Vojvodina
2007-01-01
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| Series: | Panoeconomicus |
| Subjects: | |
| Online Access: | http://www.doiserbia.nb.rs/img/doi/1452-595X/2007/1452-595X0701005A.pdf |
| _version_ | 1811275306594467840 |
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| author | Aisen Ari Veiga Francisco Jose |
| author_facet | Aisen Ari Veiga Francisco Jose |
| author_sort | Aisen Ari |
| collection | DOAJ |
| description | Economists generally accept the proposition that high and volatile inflation rates generate inefficiencies that reduce society’s welfare. Furthermore studies have shown that inflation is harmful to economic growth. However determining the causes of the worldwide diversity of inflationary experiences is an important challenge not yet satisfactorily confronted by the profession. Based on a broad dataset covering over 100 countries for the period 1975-1997 and using dynamic and static panel data econometric techniques, this paper shows that a higher degree of political instability is associated with both higher inflation levels and volatility. Not only does this paper advance the political economy literature establishing a relationship between inflation moments and political instability, but it also has important policy implications regarding the optimal design of inflation stabilization programs and of the institutions favorable to price stability. |
| first_indexed | 2024-04-12T23:35:32Z |
| format | Article |
| id | doaj.art-08964c8f9d7545f3bf4e211d03558d39 |
| institution | Directory Open Access Journal |
| issn | 1452-595X |
| language | English |
| last_indexed | 2024-04-12T23:35:32Z |
| publishDate | 2007-01-01 |
| publisher | Economists' Association of Vojvodina |
| record_format | Article |
| series | Panoeconomicus |
| spelling | doaj.art-08964c8f9d7545f3bf4e211d03558d392022-12-22T03:12:09ZengEconomists' Association of VojvodinaPanoeconomicus1452-595X2007-01-0154152710.2298/PAN0701005ADoes political instability lead to higher and more volatile inflation?: A panel data analysisAisen AriVeiga Francisco JoseEconomists generally accept the proposition that high and volatile inflation rates generate inefficiencies that reduce society’s welfare. Furthermore studies have shown that inflation is harmful to economic growth. However determining the causes of the worldwide diversity of inflationary experiences is an important challenge not yet satisfactorily confronted by the profession. Based on a broad dataset covering over 100 countries for the period 1975-1997 and using dynamic and static panel data econometric techniques, this paper shows that a higher degree of political instability is associated with both higher inflation levels and volatility. Not only does this paper advance the political economy literature establishing a relationship between inflation moments and political instability, but it also has important policy implications regarding the optimal design of inflation stabilization programs and of the institutions favorable to price stability.http://www.doiserbia.nb.rs/img/doi/1452-595X/2007/1452-595X0701005A.pdfinflationvolatilitypolitical instabilityinstitutions |
| spellingShingle | Aisen Ari Veiga Francisco Jose Does political instability lead to higher and more volatile inflation?: A panel data analysis Panoeconomicus inflation volatility political instability institutions |
| title | Does political instability lead to higher and more volatile inflation?: A panel data analysis |
| title_full | Does political instability lead to higher and more volatile inflation?: A panel data analysis |
| title_fullStr | Does political instability lead to higher and more volatile inflation?: A panel data analysis |
| title_full_unstemmed | Does political instability lead to higher and more volatile inflation?: A panel data analysis |
| title_short | Does political instability lead to higher and more volatile inflation?: A panel data analysis |
| title_sort | does political instability lead to higher and more volatile inflation a panel data analysis |
| topic | inflation volatility political instability institutions |
| url | http://www.doiserbia.nb.rs/img/doi/1452-595X/2007/1452-595X0701005A.pdf |
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